Colum

To create a leveraged floater, the issuer has to set its price higher enough(or with longer term as janakisri said) to cover the liability(to pay 2xLIBOR rate).

The issuer can't do much about the bond(6%) and the swap(-4.4%), and he just uses the two to hedge the risks.

I'm not complaining, but CFAI can simply add a line or two to clarify the confusion in the KAT example (P489). I found it was asked in AF every year.